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May 3

Cutter Summit 2007

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May 3

May 3, 2007

Cutter Summit 2007 – Lynne Ellyn; Is Innovation Relevant to IT?

Lynne is VP and CIO at DTE Energy. She and I have enjoyed much of this conference sitting together in the back row, and she now takes the stage. Her IT operation is nearly 850 employees and is responsible for [get the stats from her slide].

In a nutshell, Lynne’s answer to this question is an unqualified yes, and she shows a timeline showing IT’s role in various industries over a 40 year period. Innovation has been there all along. Within DTE Energy, she cites examples like neural networks to optimize and forecast power demand, price analysis for electricity, and interactive voice recognition.

Given that innovation matters, DTE Energy gets innovative results by encouraging innovative behavior. It is recognized, celebrated, and rewarded. I’m impressed that this is explicitly managed and incentivized. She says that the culture “creates a state” where innovation is fostered within the company. It is for the clear intentions and purposes to increase revenue while reducing costs, improving service to its customers, manage better, and differentiate DTE from the competition.

I should note that Lynne stated earlier in the presentation that they chose an INSOURCING strategy to bring this about. This doesn’t mean that they spend more on IT; in fact, their benchmarks show lower IT spend for IT as a percentage of revenue. I’d be curious as to how they’d measure [output side] – the delivery of IT capability and other outcome/value metrics around the intentions and purposes in the previous paragraph.

What Lynne is also saying about sustaining momentum, is in the words of an executive coach who she worked with, “Give it a name.” As a result Lynne raises the visibility of the innovations at DTE – she itemizes them, attaches a value, and publicizes them. This amounts to an internal PR campaign. Keeping them a secret would diminish the momentum of their innovation culture. IT gets credit. I would imagine this fosters pride in their work. In so many organizations where problems always get the attention, morale suffers.

It’s interesting that Lynne says that another way to overcome stagnation is to rotate team members through different tasks. This focuses employees on new problems, encourages them to learn about new domains, and connecting with new co-workers. As an example, she was even asked to handle food service selection for cafeterias on the DTE campus. She wasn’t experienced at all in that, but the experience was valuable for her. Teams staying stuck in one class of work can lead to stagnation and a loss of innovative energy.

Barriers to innovation: statements like “We’ve always done it this way.” She says you should consider whether this ends the conversation, or starts the conversation.

A point that jumps off of one of Lynne’s slides: An innovative, collaborative culture leverages the strengths of a diverse talent pool. I think about Richard Florida’s expression of this idea on a macro-level when he describes the strength of the U.S. as having been a talent magnet for creative people from around the world to live and work. Lynne uses the example of the diverse skills of the Cutter Consortium as also being a model of innovation. It’s a talent pool that clients draw upon by gaining access to thought leadership by people at the top of their game in their respective areas of expertise. [This conference certainly has embodied that concept when I think about the speakers, the panelists, and finally, the members of the audience.]

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May 2, 2007

Cutter Summit 2007 – Paul Robertson; Art and Paradox of Leadership

Paul Robertson leads us into this subject; fascinating that for 35 years he was Founder and Leader of the world-acclaimed Medici Quartet. As we were gathering to start the session, he treated us to wonderful melodies on the solo violin – Bach I believe.

Along the lines of the theme “Pursuing Perfection,” he is guiding us through some music history. We are listening to him describe the master violinist Jascha Heifitz, now seeing some archival video of an actual performance. What an INNOVATIVE way of addressing the subject of leadership at a conference dedicated to the subject of innovation. It’s bold, interesting, entertaining, and engaging. (Writing this blog entry is a terrible distraction in some ways.)

Paul’s approach to this subject is by enabling us to see how the sheer charisma of Heifitz was in play while preparing to launch into a musical performance with an orchestra. His deliberateness, slowness, and engaging approach to setting the tone for the performance. Paul notes that Heifitz did not want to be “loved.” He wanted to be feared and respected.

Now we are seeing the contrast of leadership qualities chosen by Heifitz, with how Paul approached the creation of the Medici Quartet. We are hearing a dramatic, entertaining, funny, and insightful description of Paul’s world, framing the subject of leadership. The use of storytelling and the interspersing of musical notes his violin is brilliant. Brilliant! [I am so proud that he is a fellow Cutter consultant in our Innovation Practice. It is both humbling and inspiring to hear his command of the topic.]

[Question: How do you become a millionaire as a quartet player? You start out life as a billionaire. The crowd erupts in laughter! (They do not do this for the money…)]

Paul’s talk is deeply engaging and I’m finding it difficult to blog while listening, given the style and mapping of his ideas to this topic. I’m going to freehand write for a while, and compose my thoughts into an extension of this entry later.

May 1, 2007

Cutter Summit 2007 – Volkswagen Case Study

This afternoon is a treat here at the Summit. Prof. Rogelio Oliva is leading a fantastic Harvard Business School (HBS) like case study for our group, using a real world situation at Volkswagen of America.

Rogelio was on the HBS faculty for Technology and Operations Management, and is now on the faculty at the Mays Business School. He has a PhD in Operations Management and System Dynamics from MIT. What a treat here! Rogelio is dynamic and fast-paced, and how he engages the audience makes everyone feel like they’re sitting at HBS as fellow classmates. The case deals with real IT budgeting negotiations at VW/Audi, and the group is totally getting into it. Rob Austin co-wrote the case, and everyone in the room is having great fun debating the case, bringing a wealth of knowledge to the conversation.

It’s a first for the Cutter Summit. Great fun. Lots of energy.

After a short break, we go into a panel discussion with Rogelio, Javier Gomez Diaz (CIO of Mexico’s Grupo Bimbo and LatinAmerica CIO of the Year 2004 (Oracle Magazine) and Mexico CIO of the Year (InfoWeek), plus our own Mike Rosen (Cutter), and (surprise) a key player from Volkswagen from the case study, Warren Ritchie, IT Director.

Fantastic session, and Tom DeMarco is running the panel, which is another home run for the Summit. Wow.

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Cutter Summit 2007 – Rob Charette on Risk

Rob Charette is going into an area that most people might not think about when they think of risk (which usually evokes feelings of worry). The UPSIDE of risk. It will be interesting to hear how he frames this conversation. Most people when they think about risk fathom the downside.

Images that follow are photos of a hurricane, then a view above the clouds from the cockpit of an airplane. Rob is using a success case study of Rockwell Collins Avionics (disclosure: Rockwell had been a longtime client of QSM in the 1990s, using the SLIM suite of software estimation and measurement tools). Rockwell designs and builds commercial aircraft flight navigation and control systems for Boeing and Airbus.

Radar and the challenge of steering around thunderstorms is the metaphor right now, and he’s talking about how aircraft navigation and radar deals successfully with weather related risk for aircraft. We are moving into how aircraft displays deal with risk, and conveying that information to the pilot, reducing the three fundamental elements of pilot risk: Lack of Information, Lack of Control, and Lack of Time. These are designed to solve the problem of “pilot situational awareness.” The goal: “Don’t hurt people, don’t hurt the airplane, and provide passenger comfort.”

Now Rob is blending the theme of innovation (and subsequent profit) with risk. I think he’s going to show how companies can creatively tackle risk in an innovative way. If they succeed, they will be at a competitive advantage and grow market share because they are positioned to deal with risks if they manifest, compared to companies that do not manage risk well and passively roll the dice on whether something bad will happen. (I think of Russian roulette.)

Rob is saying that you can be a great innovator, but it doesn’t matter if nobody buys what you’re innovating. He’s citing thinkers like Adam Smith, J.B. Bay, Ludwig von Mises, Joseph Schumpeter, Frank Knight, Peter Drucker, and Milton Friedman on various adages on innovation and entrepreneurship. It’s an interesting blending and connecting the ideas.

(Speaking of innovation, did you know that the iPod was originally released in 2001? It’s dominance of the marketplace came as a result of a series of small innovations in succession. If I’m correct, I would guess that the real explosion came when iTunes software was released for the Windows platform in 2003. At the time, over 1 million downloads occurred in the first 3.5 days. iTunes then sold over a billion songs in the three years that followed. Not bad – $1 billion in songs, in less than 3 years. Add the revenue from over 100 million iPods having been sold since its introduction. Who would have thought that iTunes would be the killer app to drive Apple’s iPod success?)

Now comes the panel discussion, with Lou Mazzuchelli (Cutter), Maria Pardee (BT Global), and Bart Perkins (Cutter) in addition to Rob Charette. Tom DeMarco is setting the stage. Tom says that Rob has laid down a wonderful metaphor that Rockwell Collins is a quintessential practitioner of risk management, and is an industry leader when it comes to innovation in the avionics sector (this is a good thing – remember: they build systems that fly airplanes.)

Lou starts out by saying that if you’re immersed in any kind of crisis within your company (your “hair is on fire”), then innovation is out the door. You have to deal with the fire first, before you can imagine doing any innovating. I am mindful of a corporate equivalent to Abraham Maslow’s Hierarchy of Needs – that few people self-actualize (innovate their lives) if they’re struggling to meet basic needs like food, water, and air.)

[My sense is that companies are continuously in some state of panic fire drill in this time-driven Internet-speed economy.]

Maria Pardee describes the challenges that BT faced on innovation and the risk for the company, during a time of a shrinking market. The transformation of the company occurred by turning it into a consumer oriented brand, in the face of the risk of them going out of business. This is an interesting linking of the topic of risk with innovation. She is describing how the company opened up its network to create new technologies, using open-source strategies and other execution ideas.

I am struck that as she talks about BT protecting the relationship of trust with its customers, that we’re talking about several ways of using the word “risk.” Risk of security of their telecom network, risk re: the relationship with its customers, security risks with regard to opening up it’s network to innovators who they needed to develop solutions, and the like.

I guess you can talk about risk when it comes to taking a risk on – ANYTHING. In that way, it is a universal topic. You can take risks and risk bad things happening, or you can take risks to avoid the risk of bad things happening. You can innovate to try and avoid negative consequences, or you can push the envelop and engage in risky behavior, where bad things might happen if you do it recklessly.

Take your pick on how you want to talk about this. If I were a panelist, how I’d start a dialog on this might be a function of my most recent experiences, and it could go anywhere, which can be good since the topic offers such flexibility. However, because of this, the panel might find it tricky to find convergence. It promises to be a pretty heterogeneous conversation.

Rob is launching into an interesting posit – to innovate you have to change the staus quo. Changing the staus quo is HARD; it feels very risky to make a strategic change, and do something different. In many cultures, it gets quashed which is what Lou is saying, and he goes back to the Apple story. Apple was brought back from the brink, and it took these risks during a time when it looked like the train was going off a bridge. Change usually doesn’t happen when things are comfy cozy; they usually happen when things are at the brink.

Fear is a great motivator. I am conscious of the notion that people and companies are often motivated in either one of two ways: one – chasing the angels, or two (more commonly), running from the demons. My sense is that when you’re operating out of fear, fight or flight responses are typically in play. In this state of mind, people can be incredibly focused, but at the same time, judgment is often compromised. (See my post on “Worrying About the Wrong Things“)

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